Is the outsourcing bubble about to burst? When Barclays Global Investors (BGI) quietly decided to shelve its plans for outsourcing middle and back office functions for its UK business, there was some concern that the momentum of the previous two years had stalled. But most of the leading providers remain bullish about the market's long-term prospects, undaunted by the increasing focus of fund managers on immediate cost benefits, said to be the primary reason for BGI's decision not to proceed.

Tom McCrossan, global head of State Street's investment manager solutions business, accepts that there has been a shift of emphasis. He says: "The market is buzzing, but sometimes fund managers have unrealistic expectations of what can be achieved. Our challenge is to create an immediate benefit for our clients while delivering the scale we need to reach our long-term goals."